Apartment sales in the outer boroughs overtook those in Manhattan during the second quarter, according to a new report.
The report from Real Capital Analytics found that there were approximately $1.7 billion worth of apartment sales in the outer boroughs from April through June, compared to about $739 million in Manhattan. This was the largest gap between outer borough sales and Manhattan sales since at least the start of 2013, with the outer boroughs outpacing Manhattan by about $976 million.
Apartment sales have been higher in the outer boroughs than in Manhattan during just three other quarters since the start 2013, and the gap has always been much smaller. In the first quarter of 2014, outer borough sales were about $256 million more than Manhattan sales; in the first quarter of 2017, they were about $217 million higher; and in the second quarter of 2017, they were about $192 million higher.
“I think part of what we’re seeing in Manhattan is just an understanding that things have changed, that prices aren’t going to go up at a double-digit pace forever,” said RCA senior vice president Jim Costello, “and buyers and sellers were just further apart on their expectations.”
One of the main reasons for such a large gap between Manhattan and the outer boroughs this past quarter was the sale of Starrett City in Brooklyn, which RCA valued at about $887 million. The massive sale made up about 52 percent of overall volume in the outer boroughs, and without it, the total would have been about $813 million—lower than Manhattan’s sales.
The size of Starrett City has been having an outsize impact on multiple midyear reports. A report from TerraCRG, for instance, found that Brooklyn saw a 113 percent increase in dollar volume year-over-year in multifamily sales thanks largely to the Starrett City deal. Without that, the increase dropped to 6 percent.
Costello said it is very unusual for apartment deals in the outer boroughs to total more than deals in Manhattan and for deals the size of Starrett City to exist outside of Manhattan in general.
“How often can you get deals close to $1 billion in Brooklyn?” he said. “Honestly, outside of Manhattan, nationally, there are few deals approaching $1 billion.”